Elon is playing a dangerous game
Elon Musk has in recent times created some controversy with his open book approach to comments in the media. Only a few weeks ago we were shocked by a tweet in which he referred to one of the Tham Luang cave rescue divers as a “pedo” following their decision not to use Mr Musk’s small rescue submarine.
In May he expressed his displeasure at having to answer questions regarding the poor financial performance of Tesla, labelling them as “boring bonehead questions”. And now in another very controversial move he has issued a statement proclaiming: “Am considering taking Tesla private at $420. Funding secured."
This announcement stunned the market with shares at the time trading for around $340. This news generated an 11% surge, boosting the value to $380 leaving those shorting the price with some fairly hefty losses. Mr Musk will certainly be enjoying the prospect of those loses coming at the hands of the companies many detractors, but it’s hard to ignore the serious issues this approach could deliver.
Despite him stating he has the funds to back the claim, if there is any possibility of a financial falter he could be charged with price manipulation, a serious charge which can lead to significant incarceration. He also risks the prospect of the price far exceeding the potential offer rendering his private aspirations unattainable.
At the same time one can understand has motivations. Private companies are not subject to the same scrutiny from investors, allowing much of the business' financial difficulties to pass under the radar. For now at least there has been no further news on the deal, but watch this space for the announcement of what would be an $80 billion dollar deal.